The Economics of Energy Efficiency and Renewables.

There's understandably a lot of excitement about photovoltaics, solar water heaters, geothermal heat pumps and other sources of renewable energy for the home. We all want to be self-sufficient. It's part of our national psyche. And, particularly for the environmentally motivated among us, the desire to reduce our dependence on traditional energy sources is strong.

But when looking at potential energy upgrades for your home, you should keep in mind a few important considerations:

1) Energy Efficiency is about more than electricity. For cold climate North American homes, the biggest source of energy consumption is space heating; space heating, in turn, is largely fueled by oil and natural gas. Barring a wholesale conversion to a electric heat (which may be expensive), photovoltaics will do nothing to reduce the amount of oil and gas that your home consumes.

2) Should you decide to invest in renewables, the scale of your investment will depend on the amount of energy your home consumes. If you can cut your home's energy consumption in half through simple, low-cost measures, and thus reduce the investment necessary to take your home to net zero in half (think: 1 solar panel vs. 2), you've made a good investment.

3) Return on investment. Air sealing might be a $1,000 dollar investment upfront, and could save you $500 or more per year, which would give you a 2-year ROI. A wind turbine in your back yard, on the other hand, might cost somewhere in the ballpark of $15,000-$20,000. That would take a while to pay itself off.

4) Energy Efficiency is about more than energy efficiency. Done right, sealing air leaks and upgrading your insulation are both measures that have a high ROI, will reduce your carbon footprint, and will reduce your energy bills. But they will also reduce drafts, make your home warmer in the winter and cooler in the summer, and potentially increase the health and longevity of your house. That's a lot of bang for your buck. So if installing renewable energy sources at your house doesn't have quite the same impact, we won't hold it against renewables: it's a tall order to fill.